Senate backs regional fuel purchase

Two senators are leaving for Guam next week as part of efforts to push for “a regional approach” in buying fuel from Singapore.

Sen. Joseph M. Mendiola said yesterday that he and Sen. Diego Songao would be conducting a site inspection in Guam, which, he said, is now buying its fuel directly from Singapore.

He said he is drafting a letter to Gov. Juan N. Babauta, urging the latter to consider investing in fuel tanks in the CNMI.

“We are writing to the governor to look at the possibility of having our own tanks here. That’s what they are doing in Guam. I’m talking with the Guam Power Authority chairman and he told me that they source their own fuel from Singapore. If we can do this, it’s a lot cheaper than buying our fuel from Mobil,” said the senator.

He said that, if the governor agrees, the CNMI government could commit capital improvement project funds for such a purpose in the next three years.

Based on his consultation with GPA chair Simon Sanchez, “they are willing to work with us,” he added, so that both Guam and the CNMI can jointly purchase fuel from Singapore.

“It’s going to be a regional approach,” Mendiola said.

This comes as the Commonwealth Utilities Corp. is about to award a contract for the privatization of power plant generation on Saipan. The contract requires CUC to provide fuel to the contractor.

CUC recently entered a $120-million fuel supply contract with Mobil for two years.

Earlier, Mendiola’s committee called for the governor, who has emergency control of CUC, to suspend the implementation of the privatization program, citing the lack of a comprehensive cost-benefit study.

The panel said that the government can rehabilitate the main power plant by making a loan of $60 million rather than allowing a profit-oriented company to do it.

The panel members said that the government can use future capital improvement funds as collateral for such a loan.

CUC’s consultant, Harris Group, said the government has not ruled out the “self-generation” option yet. He said, though, that it would extremely difficult for CUC to enter into any kind of loan at this time because of its serious financial problem.

“The problem with self-generation is CUC doesn’t have the money to rehabilitate the machines. It’s very difficult to borrow money if you’re losing money everyday,” said Harris Group executive Dennis Swann.